Sunday, December 28, 2014

even though it was a short week with the holiday, we saw a packed schedule of economic releases over the first two days, including the 3rd estimate of 3rd quarter GDP and the November report on personal Incomes and spending, both released by the the Bureau of Economic Analysis on Tuesday...Tuesday also saw the release of the advance report on November orders, shipments, and inventories of durable goods, and the report on November's new home sales, both from the Census Bureau, while Monday saw the release of the report on Existing Home Sales for November from the National Association of Realtors (NAR), and the Chicago Fed National Activity Index for November, a weighted composite index of 85 different economic metrics grouped into four broad categories of data, which saw the headline index rise to +0.73 in November, up from +0.31 in October, where positive numbers indicate growth above the historical trend....54 of the 85 Chicago Fed indicators made positive contributions to the index in November, as production related indicators added 0.64 to the index, employment-related indicators added 0.17, sales, orders, and inventories added 0.02, while the the consumption and housing category subtracted 0.10 from the overall reading for November....the index’s three-month moving average rose to +0.48 in November from +0.09 in October, the highest reading since May 2010...there was also one Fed regional manufacturing survey for December released on Tuesday, as the Richmond Fed December Survey of Manufacturing Activity, covering the 5th Fed District, which includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported increases in new orders and shipments as their manufacturing composite index rose to 7 from 4 in November...

3rd Quarter GDP Grows at 5.0% Rate, Most Since 2003

the Third Estimate of 3rd Quarter GDP from the Bureau of Economic Analysis indicated that our economy grew at a 5.0% rate in the third quarter, revised from the 3.9% growth rate reported in the second estimate last month, and up from the first estimate of 3.5%, as personal consumption expenditures, especially for health care, and non-residential fixed investment were revised upward...in current dollars, our 3rd quarter GDP would extrapolate to $17,599.8 billion annually, up 1.56%, or at a 6.42% annual rate from the $17,328.2 billion annualized figure of the 2nd quarter...however, since the change in GDP being reported here is not a measure of the change in the dollar value of our GDP but a measure of the change in our output, the current dollar value of output is adjusted for inflation based on prices chained from 2009 , from which all percentage calculations in this report are based....the resulting inflation adjustment used in the third quarter, aka the "GDP deflator", implies overall annual inflation at a 1.4% rate, unchanged from the 3rd quarter deflator reported a month ago, but up from the 2.1% annualized inflation factor reported for the second quarter...while we cover the details below, recall that all quarter over quarter percentage changes reported in this release are given at an annual rate, which means that they're expressed as a change a bit over 4 times the change that actually occurred over the 3 month period...

seasonally adjusted real gross private domestic investment grew at a 7.2% annual rate in the 3rd quarter, revised from the 5.1% estimate of last month and the 1.0% growth that was first estimated, as the growth rate of private fixed investment was revised to 7.7% from the 6.2% estimate of last month and thus added 1.21% to the 3rd quarter's growth rate...real non-residential fixed investment grew at a 8.9% rate, rather than the 7.1% previously estimated, as investment in non-residential structures was revised up from growth at a 1.1% rate to growth at a 4.8% rate, investment in equipment grew at a 11.0% rate, not the 10.7% rate previously reported, and the quarter's investment in intellectual property products was revised from a growth rate of 6.4% to a 8.8% growth rate, while growth in residential investment was revised from 2.7% to 3.2%…after these revisions, investment in non-residential structures added 0.14% to the GDP's growth rate, investment in equipment added 0.63%, investment in intellectual property added 0.34%, while growth in residential investment added 0.10% to 3rd quarter GDP... meanwhile, the real (inflation adjusted) change in private inventories was revised from $79.1 billion greater to $82.2 billion greater than the 2nd quarter, when inventories grew by $84.8 billion over the 1st quarter; hence the $2.6 billion negative change in inventory growth was smaller than negative $5.7 billion change reported last month or the originally reported $22.0 billion decrease, and thus it only subtracted 0.03% from 3rd quarter growth rather than the .14% subtraction applied in the second estimate last month....

there were also small revisions to our third quarter trade data...3rd quarter exports increased by $23.3 billion, or at a 4.5% annual rate, revised from the increase at a 4.9% rate reported last month, while imports decreased by $5.8 billion, or at a 0.9% rate, revised from the decrease at a 0.7% rate reported in the 2nd estimate...as you should recall, exports add to gross domestic product because they represent that part of our production that was not consumed or added to investment in our country, while imports subtract from GDP because they represent either consumption or investment that was not produced here...thus the smaller increase in real exports added 0.61% to 3rd quarter growth, revised from a 0.65% addition, while the smaller decrease in real imports added 0.16% from the 3rd quarter's GDP, rather than the 0.12% addition, an thus the overall impact of net trade on GDP was essentially unchanged from the 2nd estimate...

finally, there were only minor revisions to real government consumption and investment in this 3rd estimate...real federal government consumption and investment grew at a 9.9% rate vis a vis the 2nd quarter, which was unrevised, as real federal spending for defense grew at a 16.0% rate and added 0.66% to GDP, also unchanged from last month's estimate, while all other federal consumption and investment grew at a 0.4% rate and added just 0.01% to GDP growth...real state and local outlays rose at a seasonally adjusted 1.1% rate and added 0.13% to GDP growth, rather than the 0.8% rate of increase previously reported, as real state and local investment rose at a 2.1% rate and added 0.08% to GDP while state and local consumption spending rose at a 0.9% rate and added 0.04% to the quarter's growth…

our FRED bar graph below, which can also be viewed as an interactive, has been updated with these latest GDP revisions…each color coded bar shows the change, in billions of chained 2009 dollars, in one of the major components of GDP over each quarter since the beginning of 2012...in each quarterly grouping of seven bars on this graph below, the quarterly changes in real personal consumption expenditures are shown in blue, the quarterly changes in real fixed private investment, including structures, equipment and intangibles, are shown in red, the quarterly change in real private inventories is shown in yellow, the real change in exports are shown in purple, while the change in real imports is shown in green ..then the change in state and local government spending and investment is shown in pink, while the change in Federal government spending and investment is shown in grey...those components of GDP that contracted in a given quarter are shown below the zero line and subtract from GDP, those that are above the line grew during that quarter and added to GDP; the exception to that is imports in green, which subtract from GDP, and which are shown on this chart as a negative, so that when imports shrink, they will appear above the line as an addition to GDP, and when they increase, as they did in the 2nd quarter, they'll appear below the zero line....

on the same day as the GDP release, the Bureau of Economic Analysis also released their report on Personal Income and Outlays for November, which in addition to the important personal income data, also reports the monthly data on our personal consumption expenditures (PCE), which as we just saw is the major component of GDP...from that data, the BEA also computes personal savings and the national savings rate, as well as a price index for PCE, the inflation gauge the Fed targets, and which is used in this report to adjust both personal income and consumption expenditures for inflation to arrive at 'real' change figures.. ..like the GDP reports, all the dollar amounts referenced by this report are seasonally adjusted and at an annual rate; so the nominal monthly dollar changes, which are not reported, are actually on the order of one twelfth of the reported amounts... however, the percentage changes are expressed as a month over month change and are confusingly used within the report as if they refer to the annualized amounts, making for a difficult report to unpack and report on correctly...

in November, total personal income increased at a seasonally adjusted $54.4 billion annual rate, to what would be a gross national personal income of $14,930.0 billion annually, which was 0.4% higher than in October, when personal income increased by 0.3% over September... disposable personal income (DPI), which is total income after taxes, increased at an annualized rate of $42.4 billion to $13,155.9 billion annually, which was a 0.3% increase over October, while October's DPI was revised up to 0.3% over September...increases in private wages and salaries, which account for half of gross personal income, accounted for $38.7 billion of the annualized November personal income gains, up from $24.9 billion in October, as service industry payrolls increased at a $31.5 billion annual rate and goods producing industry payrolls rose at a $7.3 billion clip....increases in supplements to wages and salaries, such as employer contributions to pension plans, accounted for another $5.4 billion of November's annualized increase, while employee contributions for government social insurance, which are subtracted from the personal income figure, increased at a $5.3 billion rate...meanwhile, proprietors' income increased at a $7.6 billion rate in November, as farm owner's incomes rose at a $3.2 billion rate while incomes of individual proprietors of other types of business were up at a $4.4 billion rate....other sources of the November personal income changes included rental income of individuals, which increased at a $0.5 billion rate, personal interest and dividend income, which grew at a $5.6 billion rate, and personal transfer payments from government programs, which fell at a $0.1 billion rate..

meanwhile, November's seasonally adjusted personal consumption expenditures (PCE), which will be included in the change in real PCE in 4th quarter GDP, rose at a $67.9 billion annual rate to a level of $12,143.8 billion in consumer spending annually, 0.6% higher than in October, which itself was revised up 0.1% to 0.3% higher than September....the current dollar increase in November spending was driven by a $45.4 billion annualized increase to an annualized $8,112.5 billion in spending for services and a $21.7 billion increase to $1,347.5 billion annualized in spending for durable goods, while outlays for non durable goods rose at a $0.8 billion rate to an annualized $2,683.8 billion ...total personal outlays for November, which includes interest payments, and personal transfer payments in addition to PCE, rose by an annualized $67.7 billion to $12,579.4 billion, which left total personal savings, which is disposable personal income less total outlays, at $576.5 billion in November, down from the revised $601.7 billion in personal savings in October, which was originally reported at $651.2 billion... as a result, the personal saving rate, which is personal savings as a percentage of disposable personal income, fell to 4.4% from October's revised savings rate of 4.6%, which was originally reported at 5.0%..

while our personal consumption expenditures accounted for 68.2% of our third quarter GDP, before they were included in the measurement of the change in our output they were first adjusted for inflation, to give us the real change in consumption, and hence the real change in goods and services that were produced for that consumption...that's done with the price index for personal consumption expenditures, which is included in this report, which is a chained price index based on 2009 prices = 100....that index fell to 109.015 in November from 109.203 in October, giving us a negative month over month inflation rate of 0.017%, which BEA reports as -0.2%, and a year over year PCE price index increase of 1.17%, while core prices rose 1.41%, well below the Fed's target of 2.5% inflation articulated in their December 2012 FOMC meeting...because of the decrease in prices, the inflation adjusted or real personal consumption expenditures actually increased 0.7% in November, after rising 0.2% in October, when the PCE price index was reported as unchanged by was actually up fractionally...together, these October and November adjustments imply an annualized increase of approximately 4.2% in 4th quarter PCE, even if December PCE is unchanged ...using the same PCE price index, disposable personal income was inflated to show that real disposable personal income, or the purchasing power of disposable income, rose by 0.5% in November, after increasing by 0.3% in October...

our FRED graph below shows monthly real disposable personal income in blue and real personal consumption expenditures in red since January 2000, with the annualized scale in chained 2009 dollars for both shown in the current data box and on the lower left; also shown on this same graph in green is the monthly personal savings rate over the same period, with the scale of savings as a percentage of disposable income on the right...the spike in income and savings at the end of 2012 was mostly the result of income manipulation before the year end fiscal cliff; the earlier spikes were as a result of the tax rebates enacted as a fiscal stimulus under George Bush….

Durable Goods Order Backlog at Record $1,174.0 Billion in October, 11.8% Higher than Year Ago

the Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for November (pdf) from the Census Bureau estimated that new orders for manufactured durable goods fell by a seasonally adjusted $1.7 billion, or 0.7%, to $242.3 billion, following the revised October new orders increase of $730 million or 0.3%; year to date, new orders are 6.7% ahead of 2013....new orders for transportation equipment fell 1.2% to $75,500 million as new orders for defense aircraft fell 7.8% to $4,876 million after rising 43.5% in October, while new orders excluding transport equipment orders still fell 0.4% to $167,551 million...the widely watched new orders for non-defense capital goods less aircraft, a measure of business investment, were statistically unchanged at $70,942 million...

November's seasonally adjusted shipments of durable goods were also weak, falling $0.9 billion or 0.4 percent to $245.3 billion, after a revised 0.1% increase in October, with shipments of commercial aircraft and parts, down 4.4%% to $12,550 million, driving a 1.0% decrease in transport equipment shipments; without the drop in transportation equipment, other shipments were down just 0.1%...meanwhile, seasonally adjusted inventories of durable goods, which have been up 19 out of the last 20 months, rose another $1.7 billion or 0.4% to a new record at $408.2 billion, as inventories of transportation equipment, up 0.9% to $133.2 billion, were a major factor in the November increase....finally, unfilled orders for manufactured durable goods, which we consider a better measure of industry conditions than the widely watched but volatile new orders, increased by $4.4 billion or 0.4% to a record $1,178.9 billion....all categories of durables except machinery and defense capital goods, which both slipped 0.2%, saw their order backlog increase, with unfilled orders for computer equipment, up 2.2% to $4,228 million, and for communications equipment, up 1.1% to $38,829 million, seeing the largest percentage increases...at month end, unfilled orders for durable goods were 11.8% ahead of last November's backlog...

Existing Home Sales Fall 6.1% in November

according to the National Association of Realtors (NAR), seasonally adjusted existing home sales fell by 6.1% in November to an annual rate of 4.93 million completed transactions, from a downwardly revised annual rate of 5.25 million home sales in October, while they were still 2.1% above the annual sales rate of 4.83 million units that the NAR reported in November of last year....before the seasonal adjustment and conversion to an annualized figure, an estimated 352,000 homes sold in November, down 20.5% from the 443,000 homes that sold in October, and down 2.8% from the estimated 362,000 homes that sold in November a year ago...both seasonally adjusted data (pdf) and unadjusted data indicates that homes sales were down in every region of the country, with the West showing the largest seasonally adjusted decrease, down 9.6%, while the unadjusted data showed that home sales actually fell by between 17.7% in the West and 24.0% in the Midwest...

the preliminary median home selling price for all housing types was $205,300 in November, down 1.0% from $207,500 in October, but still 5.0% higher than the $195,500 median sales price in November of last year, in home price data that is not seasonally adjusted...the average home sales price was $252,200, down 0.7% from the $254,100 average in October, while it was up 3.5% from the $243,600 average sales price in November a year ago, with regional average home prices ranging from a high of $334,800 in the West to the average of $193,300 for homes sold in the Midwest....foreclosed homes, which sold for an average of 17% below the price of similar homes in their market, accounted for 6% of November's sales, while short sales, at 3% of all sales, were discounted by an average of 13%...the median time on the market for all homes was 65 days in November, up from 63 days in October, and up from a median of 56 days on the market in November a year ago.…those who bought houses with cash accounted for 25% of transactions in November, down from 27% in October and down from 32% all cash sales a year earlier, while those identified as investors accounted for 15% of all transactions, unchanged from the October percentage but down from the 19% of all home sales to investors in November a year ago....30 year mortgage rates averaged 4.00% in November, down from 4.04% in October, and the lowest 30 year mortgage rate since May 2013; that may be the reason the share of first time home buyers rose to 31%, after remaining unchanged at 29% over the four previous months....2.09 million existing homes remained available for sale at the end of November, which would be a 5.1 month supply of unsold homes at the November sales pace, unchanged from October but up 2.0% from the 2.05 million existing homes available for sale a year earlier...

November New Home Sales Continue Below a 440,000 a Year Pace

like existing homes sales, sales of new homes also fell in November, but previously reported sales were revised downward for the 6th month in a row as well... the Census bureau report on New Residential Sales for November estimated that new single family homes were sold at a seasonally adjusted annual rate of 438,000 in November, which was is 1.6 percent (±12.3%)* below the revised October rate of 445,000 and was also 1.6 percent (±17.8%)* below the annualized new homes sales pace in November of last year...October's annualized sales rate was revised down from the 458,000 annually reported a month ago to 438,000, while September's sales rate unrevised from the downward revision to 455,000 annually reported last month...the asterisks after the reported figures indicate that based on their small sampling, Census could not be certain whether November's new home sales rose or fell from those of October or even from those of a year ago, but there’s a 90% likelihood that November home sales were in a range between 13.9% less than and 10.7% more than those of October, and that new homes sold could have been as many as 16.2% more than last November or as few as 19.4% less than last November, a range of uncertainty to be expected in this report which has the largest margin of error of any census construction series....

the unadjusted data from Census field reps estimated that 31,000 homes sold in November, down from 36,000 in October, which was revised from the original estimate of 37,000...new home sales for the year through November were 402,000, up 1.0% from the 398,000 sold during the first eleven months of 2013...of the roughly 31,000 homes sold in November, 10,000 were completed, 11,000 were under construction, and 9,000 had not yet been started...the median new home sales price was $280,900 in November, down from $290,100 in October, while the average sales price was $321,800, down from October's $375,200 average price, as there were 2,000 less homes sold for over $750,000 in the sales mix... the Census estimated that a seasonally adjusted 213,000 new homes remained unsold at the end of November, which was a 5.8 month supply at the November sales pace, unchanged from the 5.3 month supply of unsold new homes in August...

the FRED graph below shows the seasonally adjusted annual rate of new single family home sales from this Census report in thousands since January 2000 in red, and the seasonally adjusted annual rate of existing home sales from the NAR monthly over the same time period in blue...note that the number indicated monthly for both represents an extrapolated estimate of how many homes would be sold over an entire year if that month’s pace were continued over 12 months, and that the actual sales for each month are closer to the unadjusted data we cited...this graph can also be viewed as an interactive at the FRED site, where the annualized monthly sales extrapolations for both existing and new homes will appear as you scroll across the face of the graph...

Consumer Prices Fall In November on Cheaper Energy

November consumer prices saw their largest drop in one month since 2008 as considerably lower prices for fuel offset modest price increases in food, shelter and a number of other services....the Consumer Price Index for All Urban Consumers (CPI-U) for November from the Bureau of Labor Statistics indicated that seasonally adjusted prices fell 0.3% after being unchanged in October and rising 0.1% in September, and are now just 1.3% higher than a year ago ...the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, fell to 236.151 in November from 237.433 in October, a reading 1.32% higher than the 233.069 reading from November of last year...since the drop in energy prices was the major drag on the index in November, core prices, which exclude food and energy, rose by 0.1%, as the unadjusted core index actually fell from 239.413 in October to 239.248 in November, while that index still remained 1.70% ahead of its year ago level of 235.243...

the seasonally adjusted energy price index fell by 3.8% in November after falling a total of 5.2% over the prior three months and hence energy prices are 4.8% lower than they were in November a year ago...prices for energy commodities were 6.4% lower while the index for energy services fell 0.3%...energy commodity prices decreased on a 6.6% drop in the price of gasoline, the largest component, and a 3.5% drop in fuel oil prices, while prices for other fuels, including propane, kerosene and firewood, averaged a 1.8% decrease…within energy services, the index for utility gas service fell by 1.7%, the fifth decrease in six months, while the electricity price index rose 0.1% after falling 0.2% over October and September...energy commodities are now priced 10.2% below their year ago levels, with gasoline down 10.5%, while the energy services price index is still 2.9% higher than last November...

the seasonally adjusted food index rose by 0.2% in November, after rising 0.1% in October and 0.3% in September, and it is now 3.2% higher than November a year ago....prices for food away from home rose by 0.4%, their largest increase since January 2012, as prices for meals at full service restaurants rose by 0.3% and prices at fast food restaurants were 0.5% higher, while prices for food at workplaces and schools rose by 0.2%, and prices for food from vending machines were up 0.7%....meanwhile, the price index for food at home just rose 0.1% as lower prices for fruits and vegetables and grain and dairy products partially offset higher prices for meat, beverages, and other food at home....the index for cereals and bakery products was 0.2% lower than in October as a 1.7% drop in the price index for rice, pasta and cornmeal and 0.2% lower priced cakes and cupcakes more than offset a 0.7% increase in bread prices...dairy products prices were also 0.2% lower in November as milk prices fell 0.4% while cheese prices rose 0.5%....prices for fruits and vegetables fell 0.7% as prices for prices for citrus fruit fell 2.1%, prices for potatoes fell 1.8%, frozen vegetables also fell 1.8%, and prices for canned fruits and vegetables fell 1.3% while tomato prices rose 10.4% and lettuce prices rose 5.5%....meanwhile, prices for the meats, poultry, fish, and eggs group rose by 0.6% as poultry prices rose 1.7% on 1.8% higher turkey prices and 1.6% higher chicken prices, beef prices rose 0.8% on 1.4% higher ground beef, seafood prices rose 03% on 0.9% higher frozen fish, while pork prices fell 0.3% as 1.1% lower pork chops and 1.6% lower pork roasts more than offset 1.3% higher ham prices...as of November, prices for the various cuts of beef were between 15.3% and 23.2% higher than a year earlier, while ham prices were 13.8% higher, pork roasts were 14.9% higher, pork chops were up 11.8% on the year, and sausage prices were 11.6% more than last November.....prices for nonalcoholic beverages and beverage materials were also 0.5% higher in November than in October as prices for fresh juices and non-carbonated drinks rose 1.3% while coffee prices rose 0.2%...lastly, prices for other foods at home rose by 0.4% as prices for salt and other seasonings rose 2.3%, prices for frozen and freeze dried prepared foods rose 1.2%, prices for soups rose 1.2%, and prices for sugar and artificial sweeteners rose 0.6%, while prices for olives, pickles, and relishes fell 2.2%, salad dressings were 1.8%, and butter prices fell 1.7%; even so, butter prices are still 27.2% higher than a year ago and still represent the largest line item annual increase in the index...

for the seasonally adjusted core components of the CPI, which rose by 0.1% in November, we find that the composite of all commodities less food and energy commodities fell by 0.4%, while the composite for all services less energy services rose by 0.2%....the index for shelter, which is almost 32% of the CPI, rose by 0.3%, with rents rising 0.2% and homeowner's equivalent rent rising 0.2%, while water & sewer bills rose 0.9%, and the cost of household operations was unchanged....meanwhile, prices for household furnishings and supplies, the commodity component of housing, fell by 0.5%, with a 4.4% drop in prices for laundry appliances, a 1.9% decrease in prices for linens, 1.8% lower prices for decor items and 1.2% lower cookware and tableware more than offsetting a 3.4% increase in the price of window coverings...the price index for apparel fell 1.1% in November as a 3.7% drop in prices for women's outerwear, a 3.4% drop in prices for girls apparel, a 2.4% drop in prices for women's suits, 1.7% lower priced boys' and girls' footwear, and 1.2% lower prices for men's suits, coats, and outerwear, more than offset a 1.7% increase in the prices of men's pants and shorts. ...meanwhile, the aggregate index for medical care rose 0.4% in November as the medical care services index rose 0.4% on a 0.9% increase in services from medical professionals other than doctors and dentists and a 0.5% increase in costs for physicians' services, while the medical care commodity index rose 0.6% on a 0.6% increase in prescription drug prices….then, while the transportation composite index showed a 2.0% decrease, that index includes gasoline, which you'll recall fell in price by 6.6%; prices for transportation commodities less fuel prices, however, still fell 0.4%, as prices for new cars and trucks fell 0.1%, prices for used cars & trucks fell 1.2%, tire prices fell 0.4% and prices for oil & other automotive fluids fell by 0.5%; at the same time, the transportation services index rose 0.3% on 2.8% higher car and truck rentals, a 3.1% increase in intercity train fares, a 2.2% increase in ship fares and a 1.1% increase in airline fares, while motor vehicle repairs fell 0.4%...meanwhile, the recreation price index fell 0.2% as recreation commodities fell 0.6% as television prices fell 3.2%, prices for other video equipment fell 2.7%, prices for audio equipment fell 1.2%, and prices for both toys and photography equipment fell 0.9%, while prices for recreational services were unchanged as 0.4% higher veterinary fees and 0.2% higher pet services were offset by a 1.3% drop in photographer fees and 0.9% lower rental of video discs and other media...lastly, the aggregate education and communication price index fell 0.1% as education and communication commodities fell 0.9% on a 2.9% drop in prices for telephones and other consumer information hardware and 1.5% lower prices for personal computers and similar gear, while the education and communication services index was unchanged, as a 0.6% decrease in charges for wireless phone services was offset by a 0.4% increase in college tuitions and fees and 0.5% higher postage...in November, 3 line items among the CPI core components showed a annual price drops of greater than 10%: televisions, which have fallen in price by 16.2%, telephone hardware, which is now priced 10.6% less, and laundry appliances, which are now 10.2% cheaper than they were a year ago...

our FRED graph below shows the overall change in each of the major component indexes of the CPI since January 2000, with all the indexes reset to 100 as of that month for an apples to apples comparison of the price changes in each since...in blue, we show the relative track of the price index for food and beverages; in bright green, we show the reset price index for all housing components, which includes rent, homeowners equivalent rent, utilities, insurance & household maintenance; in red, we have the price changes for apparel, the only index to show a net price decline over the previous decade; while the relative change in the price index for medical care shown in violet has obviously seen the greatest price increase over the period…next, the transportation price index is in orange, and shows the impact of volatile fuel prices on the cost of transportation, while the price change for education and communication over the period is tracked in brown, and in dark green is the relative strength of the index for recreation prices...finally, we’ve added the track of the overall CPI-U in black, which tends to track close to the large housing component, which makes up 41.5% of the total index…this graph can also be viewed as an interactive, wherein you can track the monthly changes in all of these relative price indexes by dragging your cursor across the graph…

November Industrial Production Up 1.3% to a Record High

the Fed's G17 release on Industrial production and Capacity Utilization for November indicated that industrial production rose 1.3% from a October reading which itself was revised from a decrease of 0.1% to a increase of 0.1% ...the industrial production index, which is benchmarked to 2007 production being equal to 100.0, rose to a record 106.7 from the previously issued reading of 104.9 in October, which has been revised to 105.3 with this report, while the industrial production index for September was revised from 105.0 to 105.5 and the August index was revised from 104.1 to 104.3...the manufacturing index, which accounts for roughly 70% of the industrial composite, rose 1.1% in November to 102.2, while the manufacturing index for October was revised up from 100.6 to 101.1, after the September manufacturing index was revised up from 100.4 to 100.7 and the August index was revised up from 100.2 to 100.3...after these revisions and this month's gain, the November manufacturing index is now 4.8% higher than the level of November 2013....in addition, the seasonally adjusted utility index rose 5.1% to 105.6 as electricity production rose 4.8% and natural gas output increased by 6.9% due to the abnormally cold November; even so, the utility index is still only 1.8% above last November's reading...meanwhile, the mining index, which includes oil & gas production, fell 0.1% to 132.6 in November, after falling by 1.0% in October, as lower oil prices are slowing the higher cost extraction processes, even as the index remains 9.3% higher than a year ago...

in addition to the breakdown of industrial production into the three major industry groups, this release also reports indexes for industrial production by market group...the seasonally adjusted production of final products and nonindustrial supplies, which accounts for 52.7% of total production, rose by 1.7% in November as production of consumer goods rose 2.5% after slipping 0.1% in October....production of durable goods rose by 3.0% as the heavily weighted automotive products sector rose 5.0% and production of consumer electronics rose 2.6%... in addition, production of non-durable goods rose by 2.3% as output of consumer energy products rose 5.7% while output of non-energy non-durables rose 1.2%, as clothing production rose by 2.5%, the output of food and tobacco rose 1.5%, chemical products production rose 0.8%, and paper products production rose 0.3%....over the preceding year, production of durable goods increased by 5.4%, led by 7.8% growth in output of appliances, furniture, and carpeting, and a 7.4% increase in production of automotive products, while annual production of non-durable goods grew by 3.6% as a 1.6% decrease in output of paper products partially offset 5.7% growth of chemical products output and over 3% increases in output of energy and other non-durables..

seasonally adjusted production of business equipment rose 1,2% in November after rising by an upwardly revised 1.0% in October as production of production of transit equipment rose 1.7% and production of industrial equipment rose 1.4% while production of information processing equipment slipped 0.1%...over the past year, output of business equipment rose by 5.8%, as production of industrial equipment rose by 8.3%, production of transit equipment rose by 5,8%, and output of information processing equipment rose by 2.5% ....meanwhile, production of defense and space equipment rose by 0.3% in November and grew by 2.1% over the year ending November ...in addition, production of supplies for use in construction increased by 0.5% for the month and by 4.7% for the year, while production of business supplies rose 1.2% in November and grew 3.7% for the year...meanwhile, production of raw and intermediate materials that would input into other production processes increased by 0.8% in November while growing 6.0% over the year, with the output of energy materials and the output of consumer parts both up 7.4%, while raw and intermediate paper production fell 0.8% over the year ending November....

for capacity utilization, which is the percentage of our plant and equipment that was in use during the month, the Fed found that the utilization rate for total industry rose from a revised 79.3% in October to 80.1% in November, which was also up from a utilization rate of 78.5% in November last year....78.4% of our total manufacturing capacity was in use during November, up from a revised 77.6% in October and up 0.9% from the factory operating rate of 77.5% in November of last year...the operating rate for NAICS classified durable goods manufacturers was at 78.4%, up from 77.8% in October, with capacity utilization ranging from 84.4% for manufacturers of electrical equipment, appliances, and components to a low of 64.8% for manufacturers of non-metallic mineral products, while the November operating rate for NAICS classified manufacturers of non-durables was at 80.0%, up from 79.1% in October, with the oil and coal products industry now operating at 86.3% of capacity while the printing industry was operating at just 73.1% of capacity... meanwhile, capacity utilization by the 'mining' industry fell 1.5% from 88.7% to 87.9%, reflecting a pullback in drilling by the oil and gas industry due to lower oil prices, while the operating rate for utilities rose from 78.5% to 82.4%, reflecting above normal consumption due to below normal temperatures....

our FRED graph for this report below shows the percentage of capacity in use for all industries monthly since 2007 in pink, while it shows the the seasonally adjusted industrial production index values for all industry in black, the manufacturing production index in blue, the utility production index in green, and the mining production index in red from the beginning of the index year of 2007, at which time they were all benchmarked to equal 100.0…the recent downturn mining and upturn in utility production are both fairly evident:

New Housing Construction Continues at a Million Units a Year Pace in November

according to the Census report on New Residential Construction for November (pdf) starts on new housing units were estimated to be at a seasonally adjusted annual rate of 1,028,000 in November, which was 1.6 percent (±8.1%)* below the revised estimated pace of 1,045,000 homes hypothetically being started annually in October, and 7.0 percent (±10.2%)* below the annual rate of 1,105,000 housing starts estimated for November a year ago...the asterisks indicate that the Census, based on their survey of a small percentage of permit offices visited by Census field agents, does not have sufficient data to determine whether housing starts rose or fell for the month or even for the year, while the numbers in parenthesis indicates their 90% confidence range – ie, housing units started in November were likely at a seasonally adjusted annual rate ranging between 9.7% less and 6.5% greater than those in October.....the unadjusted estimates from which those annual rates were extrapolated indicated an estimated 77,500 housing units were started in November, down from 87,600 in October, which was revised up from 84,000, with 47,700 of those November starts being single family dwellings, while construction was started on 28,800 apartment units in buildings with 5 or more units...

the monthly data on new building permits have a much narrower margin of error than new housing starts and hence are probably a better monthly indicator of new construction trends than the volatile and often dramatically revised starts data... in November, Census estimated new permits were issued at a seasonally adjusted annual rate of 1,035,000, which was 5.2 percent (±1.4%) below the revised October annual rate of 1,092,000 and 0.2 percent (±1.8%)* below the 1,037,000.annual rate estimated for new permit issuance in November of last year...those estimates were extrapolated from the unadjusted estimate of 69,800 new permits issued in November, which was down from the estimated 96,400 new permits issued in October...of those units permitted in November, 59,600 (±1.1%) were for single family homes, and 36,500 (±1.0%) represented permits for housing units in building with 5 or more units...our FRED graph on this report below, which can also be viewed as an interactive at the FRED site, shows the seasonally adjusted annual rate of housing units started in thousands monthly in blue, and the annual rate of housing units authorized by building permits monthly in red since 2000…note that the number in thousands shown monthly for both metrics represents an extrapolated estimate of how many units would be permitted or started over an entire year if that month’s pace were continued over 12 months; actual starts and permits each month are closer to the unadjusted data we cited…

State and Regional Employment for November

this week also saw the release of the Regional and State Employment and Unemployment Summary for November, a report which further expands on the national employment situation summary we covered two weeks ago by breaking down the state and regional details...although we're told in opening that 41 states and the District of Columbia saw their unemployment rate decrease in November while 3 states saw a jobless rate increase and 6 states had no change, we know that the unemployment rate data comes from the household survey with its large margin of error, and they make that point later in the report when they tell us only 22 of those states had statistically significant monthly unemployment rate decreases, led by North Carolina, where the unemployment rate fell from 6.3% to 5.8%, followed by four states that saw employment rates by drop by 0.4%: Delaware, where the jobless rate fell from 6.4% to 6.0%; Georgia, where it fell from 7.6% to 7.2%; Maryland, where it fell from 6.0% to 5.6%; and Michigan, where the unemployment rate fell from 7.1% to 6.7%..…meanwhile, there were no states that saw a statistically significant increase in unemployment....the BLS table with the seasonally adjusted count of the unemployed and the unemployment rate for each state is here...

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links that accompanies these commentaries, most from the aforementioned GGO posts, contact me…)

Sunday, December 14, 2014

the key release this week was on retail sales for November from the Census Bureau; in addition, there were also two Census reports on October wholesale and business inventories, giving us the first look at what impact that the change in inventories might have on fourth quarter GDP...we also saw the Producer Price Index for November and the Job Openings and Labor Turnover Survey (JOLTS) for October, both of which were from the Bureau of Labor Statistics...

the Advance Retail Sales Report for November (pdf) from the Census Bureau estimated that our total seasonally adjusted retail and food services sales were at $449.3 billion in November, which was an increase of 0.7% (±0.5%) from the revised October sales of $446.1 billion, and 5.1% (±0.9%) above sales in November of last year....October's seasonally adjusted sales were originally reported at $444.5 billion, and with that upward revision the percentage change from September October was revised from +0.3 percent (±0.5%)* to +0.5 percent (±0.2%)...thus, for the first two months of the fourth quarter, retail sales have grown by 1.2%, or at a 7.6% annual rate, suggesting a strong contribution from goods to 4th quarter personal consumption expenditures, which account for 23% of GDP....estimated unadjusted sales in November, extrapolated from surveys of a small sampling of retailers, indicated sales rose to $443,832 million in November from $441,814 million in October, and up from the $429,408 million of sales in November a year ago, a 3.36% year over year increase which suggests an aberration in the seasonal adjustment, likely due to the lessening influence of recession data on the basis..

to break down the details of this initial November retail sales estimate, we'll again start by including the table of monthly and yearly percentage changes in sales by business type taken from the Census pdf.....the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business type from October to November in the first sub-column, and then the year over year percentage change for those businesses since last November in the 2nd column; the second pair of columns gives us the revision of last month’s October advance monthly estimates (now called "preliminary") as revised in this report, likewise for each business type, with the September to October change under "Sep 2014 revised" and the revised October 2013 to October 2014 percentage change in the last column shown...for reference, here is what those October percentage changes looked like before this month's revision....

looking at the details for November sales in the first column above, it's fairly clear that the seasonally adjusted 1.7% increase in motor vehicle and parts sales to $91,929 million was a major reason for the stronger than expected headline increase for the month, but even excluding motor vehicles and parts, retail sales rose 0.5% to $357,353 million...other than automotive products, November's retail sales were stronger than October's for building material and garden supply stores, where sales rose 1.4% to $28,086 million, for clothing stores, where sales rose by 1.2% to $21,458 million; for non-store retailers, where sales rose by 1.0% to $41,256 million, for electronics and appliance stores, where sales rose 0.9% to $9,374 million; for drug stores, where sales rose 0.8% to $25,511 million, for bars and restaurant, where sales rose 0.7% to $49,351 million, for furniture stores, where sales rose 0.5% to $8,551 million, and for general merchandise stores, where sales also rose by 0.5% to $56,050 million...the only business types that saw seasonally adjusted sales fall in November were gas stations, where sales fell 0.8% to $43,578 million, and miscellaneous store retailers, where sales fell 1.7% to $10,032 million...

looking at the revisions to October sales in the table above and comparing them to the table from the advance report for October sales as released last month, we find that a large factor in the revision of October's sales from an increase of 0.3% to an increase of 0.5% was the revision of sales of motor vehicles and parts, from the previously reported increase of 0.5% to an increase of 0.8%, with car dealers specifically seeing a 0.9% increase; but even so, October's sales without automotive sales are still now up 0.5% vs the previously reported 0.3% increase..other retail businesses seeing sizable upward revisions to last months sales included the miscellaneous store category, where October sales were revised from an increase of 0.5% to a 1.3% jump, sales at specialty stores, ie, sporting goods, book and music stores, which have been revised from an increase of 1.2% to an increase of 1.8%; sales at electronic and appliance stores, which were revised from a drop of 1.6% to a decrease of 1.0%, sales at restaurants and bars, who saw sales rise 1.4% rather than the 0.9% first reported, and sales at furniture stores, which were revised from the original 0.2% gain to an increase of 0.7%...meanwhile, sales at drug stores increased by just 0.2%, not the 0.7% first reported, while October sales at non-store retailers were revised down from a 1.9% jump to an increase of 1.6%...

Producer Prices Fall 0.2% in November; Intermediate and Raw Goods Lower on the Year

the November report on the Producer Price Index from the Bureau of Labor Statistics showed that the seasonally adjusted producer price index for final demand fell by 0.2%, after rising 0.2% in September and falling 0.1% in August, reducing the year over year increase in the index to 1.4%, the lowest year over year reading since February...lower prices overall were led by the price index for final demand for goods, aka 'finished goods', which fell by 0.7% after falling 0.4% in October, 0.2% in September and 0.3% in August, as the price index for final demand for energy fell 3.1%, driven by a 6.5% drop in the wholesale price of LP gas and a 6.3% drop in wholesale gasoline prices...the price index for final demand for foods was 0.2% lower, as 11.0% higher prices for wholesale fresh vegetables and 10.6% higher priced oilseeds offset lower prices in other foods, including a 8.7% drop in wholesale pork products...even the index for final demand for core goods fell by 0.1% in November, as prices for industrial chemicals were 3.3% lower...meanwhile, the index for final demand for services rose by 0.1%, even though the index for final demand for transportation and warehousing services fell 0.8%, as the index for final demand for trade services and the index for final demand for services less trade, transportation, and warehousing services both rose 0.1%...

this report also showed the price index for processed goods for intermediate demand fell by 1.0%, the largest decrease since a 1.1% decline in March of 2013, and is now negative for the year, as prices for intermediate processed energy goods fell 3.4%, while prices for intermediate processed foods and feeds fell 0.3% and even core intermediate producer prices were 0.5% lower as intermediate materials used in nondurable manufacturing were priced 2.2% lower....in addition, the price index for intermediate unprocessed goods fell by 1.3% after falling 2.4% in October and is now 1.6% below the level of a year ago, on a 3.7% drop in the index for raw energy materials and a 1.6% drop in prices for unprocessed nonfood materials less energy, while producer prices for for unprocessed foods and feeds rose by 0.9%......finally, the price index for services for intermediate demand rose 0.3% in November, as a 0.3% decrease in the index for transportation and warehousing services for intermediate demand was offset by a 0.4% decrease in prices for intermediate services less trade, transportation, and warehousing, while prices for trade services for intermediate demand were unchanged...over the 12 months ended in November, the price index for services for intermediate demand rose 1.5%...

the first release on inventories we saw this week was the Wholesale Trade, Sales and Inventories Report for October from the Census Bureau, which estimated that seasonally adjusted sales of wholesale merchants rose 0.2 percent (+/-0.9)* to $454.6 billion from the revised September estimate of $453.7 billion, and were up 4.3% (+/-1.6%) from October a year earlier...the September preliminary sales estimate was revised down by $0.6 billion or 0.1%, and hence was statistically unchanged from August....October wholesale sales of durable goods were up 0.8 percent (+/-1.2%)* over September and were up 6.0 percent (+/-1.4%)* from October a year ago, as wholesale electrical and electronics sales rose 1.9% while wholesale automotive sales fell 1.1%...seasonally adjusted sales of nondurable goods were down 0.3% (+/-1.1%)* from September but were up 2.8 percent (+/-2.5%) from last October as wholesale sales of farm products rose 8.0% while wholesale sales of petroleum and petroleum products fell 5.8%...note that the asterisks indicate that Census does not yet have sufficient statistical evidence to determine whether sales actually rose of fell for the periods indicated....this release also reported that seasonally adjusted wholesale inventories were valued at $542.0 billion at the end of October, 0.4% (+/-0.4%)* higher than the revised September level and 6.8% (+/-1.1%) above last October's level, while September's preliminary inventory estimate was revised up by $0.9 billion or 0.2%...wholesale durable goods inventories were up statistically unchanged (+/-0.4%) from September and up 8.5 percent (+/-1.4%) from a year ago, with wholesale inventories of computers, peripherals and software down 3.6% while inventories of hardware and plumbing and heating equipment were up 1.6%....inventories of nondurable goods were up 1.2% (+/-0.7%) from September while they were up 4.2% (+/-1.2%) from last October, as wholesale inventories of drugs and drugstore supplies were up by 3.2% while wholesale inventories of petroleum and petroleum products were down 1.9%... finally, the closely watched inventory to sales ratio of merchant wholesalers was at 1.19, unchanged from September but up from the inventory to sales ratio of 1.16 in October of last year...

then on Thursday, the Census Bureau released the Manufacturing and Trade Inventories and Sales report for October, which is covered in the media as the business inventories report, and which estimated the combined value of seasonally adjusted distributive trade sales and manufacturers' shipments was at $1,350.9 billion in October, down 0.1% (±0.3%)* from September, while 3.4% (±0.5%) above the total monthly sales level of October of last year...manufacturers sales were estimated at $499,247 million, down 0.8%, while retailer's sales were estimated up 0.4% at $397,048 million and merchant wholesalers, up 0.2%, accounted for $454,587 million of the overall total....meanwhile, total manufacturer's and trade inventories were estimated to have increased 0.2 percent (±0.1%) from September to a seasonally adjusted $1,760.4 billion at the end of October, which was up 4.8 percent (±0.5%) from October a year earlier...seasonally adjusted inventories of manufacturers were estimated to be valued at $655,603 million, inventories of retailers were estimated to be valued at $562,780 million, and inventories of wholesalers were estimated to be valued at $541,985 million at the end of October...the month end total business inventories to total sales ratio, the metric which is watched to determine if inventories are becoming excessive, was at 1.30, unchanged from September but up a bit from 1.29 October a year ago...

October Job Openings and Quits Remain Near Post Recession Highs

the October Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 149,000 to 4,834,000 at the end of October, while the estimate for jobs open at the end of September was revised down by 50,000 from the originally reported 4,735,000 openings to 4,685,000....job openings in restaurants and hotels rose by 61,000 to 669,000 and openings in construction rose by 24,000 to 136,000, while openings for state and local government jobs fell by 41,000 to 354,000.....job openings as a percentage of the employed labor force rose to 3.3% from 3.2% in September, up from 2.8% in October a year ago and up from a low of 2.7% in January...based on 8,995,000 officially unemployed in October, there would be 1.9 unemployed who were actually looking for work during October for every job opening; that, of course, does not count those who might have wanted a job but didn't look for work during the month...

the JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and 'other separations', which include retirements and deaths.... in October, seasonally adjusted new hires totaled 5,055,000, down 20,000 from the 5,075,000 hired or rehired in September, as the hiring rate as a percentage of all employed remained unchanged at 3.6%, while up from 3.4% in August and up from the 3.4% hiring rate in October a year earlier...while hiring rose by 85,000 to 778,000 in retail, it fell by 89,000 to 1,079,000 in professional and business services.... meanwhile, total separations rose, from 4,809,000 in September to 4,824,000 in October, as the separations rate as a percentage of the employed rose from 3.4% to 3.5%, and up from 3.1% a year earlier...subtracting the 4,824,000 total separations from the total hires of 5,055,000 would imply an increase of 231,000 jobs in October, 12,000 less than the revised payroll job increase of 243,000 jobs for October reported by the BLS establishment survey last week, a difference not unexpected between these two surveys that both have wide confidence intervals...

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links that accompanies these commentaries, most from the aforementioned GGO posts, contact me…)

Employers Add 321,000 Jobs in November in the Best Jobs Year of the Century

the November survey of establishments conducted by the Bureau of Labor Statistics indicated that nonfarm payroll employment increased by a seasonally adjusted 321,000 jobs to 140,045,000 jobs, about 100,000 more than was expected, while October's payroll jobs count was revised up from 214,000 to 243,000 jobs added, and September's count was revised up from 256,000 to 271,000, hence resulting in a reported net addition of 365,000 seasonally adjusted jobs with this release, and 2,650,000 so far this year, the highest year to date job creation count since 1999....the unadjusted establishment data indicates that there were actually 497,000 non-farm payroll jobs added in November, as seasonal retail hiring picked up pace before being normalized by the seasonal adjustment....the FRED bar graph below incorporates the seasonal adjustments and the revisions to the September and October reports and shows the reported payroll job change monthly since the beginning of 2008, with job gains above the zero line and job losses below it...

seasonally adjusted payroll jobs increased in every major sector in November, led by an increase of 86,000 more jobs in the broad professional and business services category, with 28,400 of those in employment services and another 16,400 in accounting and bookkeeping services...another 50,200 more than the seasonal normal jobs were added in retail, with 11,300 of those in clothing and accessories stores, and 10,500 more added by vehicle and parts dealers...an additional 37,200 workers were added by health care and social assistance employers, with 6,600 of those employed in doctor's offices...there were also 28,000 more jobs in manufacturing, with 17,000 of those broadly spread among a dozen durable goods industries and 7,100 added in plastics and rubber making...the accommodation and food services sector added 27,300 more jobs, as bars and restaurants hired 26,500 more than a normal November....then there were 20,000 more jobs in construction as residential specialty trade contractors added 13,300 workers, and the financial sector also added 20,000 more jobs, with 10,100 of those working for insurance carriers and related companies...16,700 more slots were added in the transportation and warehousing sector, as couriers and messengers added 4,700 more than they normally would in advance of the holidays...other sectors adding jobs include the government sector, where 7,000 jobs were added, including 5,400 more in state level education facilities, 4,000 in information, 2,500 in wholesale trades, and 600 in private education...

November Household Survey Finds Employment Stagnant

in contrast to the jobs data supplied by employers, the personal employment data extrapolated from the November survey of 60,000 households was remarkably weaker, although it's not directly comparable to the establishment data, since it also includes farm workers and the self-employed...the November household summary indicated that the seasonally adjusted count of the employed rose by just 4,000 to 147,287,000, while the number of unemployed rose by 115,000 to 9,110,000, which together with the employed accounted for an increase of 119,000 in the labor force, which now numbers 156,397,000...the relatively small increase in those unemployed, however, was not enough to change the unemployment rate, which is the count of the unemployed as a percentage of the total, as it remained at 5.8%, unchanged from October...however, with an increase of 187,000 in the working age population, the count of those not in the labor force rose by 69,000 to 92,447,000, not enough to change the labor force participation rate, which remained at 62.8%, same as in October...similarly, with the tiny increase in the count of the employed, the employed to population ratio also remained unchanged from October at 59.2%....our FRED graph below shows the employment to population ratio, which we could think of as the employment rate, in blue, and the labor force participation rate in red, back to January 2000...

October Trade Deficit Down by $0.2 Billion Because September's was Revised Up by $0.6 Billion

the October report on our International Trade in Goods and Services from the Commerce Department indicated that our seasonally adjusted trade deficit in goods and services was $43.4 billion for the month, down $0.2 billion from the revised trade deficit of $43.6 billion in September, as our exports rose $2.3 billion to $197.5 billion on a $2.0 billion increase to $138.0 billion in our exports of goods and a $0.3 billion increase to $59.5 billion in our exports of services, while our imports rose $2.1 billion to $241.0 billion on a $2.0 billion increase to $200.7 billion in our imports of goods, while our imports of services rose $0.2 billion to $40.3 billion... the September trade deficit was revised up to $43.6 billion from the previously reported $43.0 billion, implying a downward revision of similar magnitude to 3rd quarter GDP...furthmore, considering that import prices were down 1.3% in October, the increased dollar value of our imports means we are buying even more goods on an inflation adjusted basis, and hence will subtract even more than usual from 4th quarter GDP....for the first 10 months of this year, our trade deficit has increased $20.5 billion, or 5.1 percent, from the same period in 2013, as exports increased $57.8 billion and imports increased $78.3 billion...

the increase in October exports was largely driven by a $1,737 million increase to $47,680 million in our exports of capital goods, as our exports of civilian aircraft rose by $996 million, our exports of generators rose by $301 million, our exports of other industrial machines rose by $195 million, and our exports of railway equipment rose by $185 million....other end use categories of exports that rose in October included consumer goods, which rose by $433 million to $17,019 million on a $226 million increase in pharmaceuticals, and exports of automotive vehicles, parts, and engines, which rose by $163 million to $13,651 million...meanwhile, our exports of foods, feeds and beverages fell by $147 million to $11,640 million as a $185 million decrease in our exports of soybeans and a $104 million decrease in our corn exports was partially offset by a $77 million increase in our exports of other animal feeds..our exports of industrial supplies and materials also fell, by $86 million to $42,078 million, as our exports of fuel oil fell by $1,284 million and our exports of other petroleum products fell by $188 million while our exports of non-monetary gold rose by $440 million, our exports of finished metal shapes rose by $173 million, and our exports of steelmaking materials rose by $163 million....in addition, our exports of goods not categorized by end use fell by $136 million to $5,163 million..

an increase of $1,305 million to $28,286 million in our imports of automotive vehicles, parts, and engines and an increase of $1,112 million to $51,029 million in our imports of other capital goods were the primary drivers of our increase in imports from September to October; among capital goods, our imports of computers increased by $773 million, our imports of computer accessories rose by $280 million, our imports of semiconductors rose by $189 million, and our imports of photo finishing machinery increased by $132 million...our imports of industrial supplies and materials also increased, by $277 million to $54,865 million, as we imported $260 million more iron and steel mill products, $235 million more in fuel oil, $123 million more in bauxite and aluminum, and $118 million more in non-monetary gold while we imported $485 million less crude oil, $353 million less organic chemicals, and $123 million less natural gas...our imports of foods, feeds and beverages were also up, increasing by $226 million to $10,910 million, as our imports of meat rose by $58 million and imports of several other categories of foodstuffs increased marginally while our imports of fish and shellfish fell by $49 million...on the other hand, our imports of consumer goods fell by $759 million to $46,942 million as our imports of cell phones fell by $1,053 in October after rising $1,919 million in September on the introduction of the iphone6, our imports of pharmaceuticals fell by $266 million, and our imports of gem diamonds fell by $173 million, while our imports of cotton apparel and household goods rose by $250 million and our imports of artwork antiques and other collectibles rose by 236 million...in addition, our imports of goods not categorized by end use fell by $133 million to $6,597 million...

included below is Bill McBride's graph of our trade deficit from his coverage of this report, which shows the relationship of our net petroleum trade deficit to our deficit overall....reading from the top $0 line down, the black graph line tracks our deficit in petroleum trade as a negative in billions of dollars since 1998; over the same span, the red graph shows our trade deficit for everything else except oil, also as a negative from the $0 line; combined together, those two sum to our total trade deficit, which Bill has graphed in blue...even though our deficit in petroleum & related products increased in October, it's pretty clear that our oil deficit in black has generally been falling (ie, going up towards zero on this chart) over the past few years, while our trade deficit in everything else in red has continued to grow...much of that "everything else" is with China; in October, our deficit with China decreased $1.6 billion to $29.6 billion..

the Census report on Construction Spending for October (pdf) estimated that our seasonally adjusted construction spending for the month would work out to $971.0 billion annually if extrapolated over an entire year, which was 1.1 percent (±1.8%)* above the revised September estimate of spending at a $960.3 billion annual rate and 3.3 percent (±2.0%) above last October's adjusted and annualized level of construction spending....construction spending for September was revised from the originally reported $950.9 billion to $960.3 billion and construction spending for August was revised up from $955.2 billion to $961.0 billion, so construction spending for the third quarter is thus considerably higher than previous estimates, and will likely result in upward revisions of GDP components for residential construction, private structures, and public investment.....private construction spending was at a seasonally adjusted annual rate of $692.4 billion, in October, 0.6 percent (±0.8%)* higher than the revised September estimate, with residential spending rising 1.3 percent (±1.3%)* above the revised September estimate of $349.1 billion and non-residential construction falling 0.1 percent (±0.8%)*, while public construction spending was estimated at $$278.6 billion, 2.3 percent (±3.1%)* above the revised July estimate; hence, 4th quarter GDP should get an initial boost from residential construction and government investment...

the Census Bureau also released the Full Report on Manufacturers’ Shipments, Inventories, & Orders for October (pdf), which showed new orders for manufactured goods fell by $3.3 billion or 0.7% to $496.6 billion, after falling a revised 0.5% in September and a record $56.0 billion or 10.0% in August, as new orders for non-durable goods fell 1.5% while new orders for defense and commercial aircraft rebounded...this report also showed factory shipments fell by $3.8 billion or 0.8% to $499.2 billion, after a 0.1% increase in September, and that October factory inventories rose by $0.5 billion or 0.1% to a record high $655.6 billion, and unfilled factory orders increased by $4.9 billion or 0.4% to $1,174.2 billion, which was also the highest level value of unfilled orders on record....

the Fed's G.19 Release on Consumer Credit for October showed that total seasonally adjusted consumer credit outstanding increased by $13,2 billion to $3,278.9 billion, or at a 4.9% annual rate, the slowest growth in credit in a year... the revolving credit portion of the aggregate, which would mostly be credit card debt, increased by $1.0 billion, or at a 1.3% annual rate, to $882.6 billion, while non-revolving credit, which includes loans for cars and college tuition but not borrowing for real estate, rose at by $12.3 billion to $2,396.3 billion, an annual growth rate of 6.2%....meanwhile, the November report on light vehicle sales from Ward's Automotive estimated vehicle sales were occurring at a 17.08 million annual rate during the month, the second highest total in 8 years, up from the annual rate of 16.35 million reported for October and 5.5% higher than November of last year ...

Mortgage Delinquencies Fall to 5.44% of October Loans While Average Time In Foreclosure Rises to Record 1024 Days

according to the Mortgage Monitor for October(pdf) from Black Knight Financial Services (BKFS, formerly LPS Data & Analytics), there were 857,824 home mortgages, or 1.69% of all mortgages outstanding, remaining in the foreclosure process at the end of October, which was down from 892,796, or 1.76% of all active loans that were in foreclosure at the end of September, and down from 2.54% of all mortgages that were in foreclosure in October of last year...these are homeowners who had a foreclosure notice served but whose homes had not yet been seized, and October’s so-called "foreclosure inventory" was the lowest percentage of homes in foreclosure since early 2008... new foreclosure starts fell in to 81,437 in October from 91,038 in September, the lowest since 78,796 foreclosures were started in April and well below the 118,837 foreclosures that were started in October of last year...

in addition to homes in foreclosure, October data showed that 2,759,053 mortgage loans, or 5.44% of all mortgages, were at least one mortgage payment overdue but not in foreclosure, down from 5.67% of homeowners with a mortgage who were more than 30 days behind in September, and down from the delinquency rate of 6.28% a year earlier...of those who were delinquent in October, 1,100,801 home owners were considered seriously delinquent, which means they were more than 90 days behind on mortgage payments, but still not in foreclosure at the end of the month...thus, a total of 7.13% of homeowners with a mortgage were either late in paying or in foreclosure at the end of October, and 3.86% of them were in serious trouble, ie, either "seriously delinquent" or already in foreclosure at month end...

as you'll recall, the mortgage monitor is a mostly graphics presentation that covers all aspects of the mortgage servicing business, and today we'll just focus on a few graphs that show the lengthening period of time that those are in foreclosure remain stuck in the process....you might also recall that the pipeline ratio is a mortgage industry metric indicating how many months the average troubled home loan typically remains in the foreclosure process in each state, and it is computed by adding those homes that are seriously delinquent to those already in foreclosure and dividing that sum by the average number of completed foreclosures per month in each state over the previous 6 months....what that results in is the average number of months a problem home loan would be in the "foreclosure pipeline" at the current pace of foreclosure in each state, before the foreclosure process on all seriously delinquent homes would be completed....the first graph below, from page 11 of the Mortgage Monitor, shows the historical pipeline ratio for judicial states, where a court proceeding is necessary to complete a foreclosure, in blue, and the same ratio in non-judicial states, where such a proceeding isn't necessary for the banks to have the the home seized, in red....obviously, early on in the crisis, the process was much longer for judicial states, with their average reaching 118 months and the foreclosure pipeline ratios reaching 50 years for New York and New Jersey, but as we can see on the graph, the difference between the types of states has closed, as judicial states have moved to speed up the process...even so, the pipeline ratio now averages more than 4 years for both types of states; 52 months for judicial states, and 51 months and rising for non-judicial states...the reason for the increase in the foreclosure pipelines recently is not so much delays in court anymore, but procrastination on the part of the mortgage servicers and banks, possibly because of defective titles, but also because they've experienced quite a bit of deterioration in the properties they've already seized, and would rather have them occupied by delinquent homeowners than ravaged by vandals..

the next graphic, from page 12 of the mortgage monitor, shows the average number of months that loans have been delinquent for each type of state and for each stage of foreclosure, again with blue indicating judicial states and red indicating non-judicial states; we can see that foreclosures are typcially initiated after nearly ten months of delinquency for both types of states, but once in the process they remain in the "foreclosure inventory" for over 2 years in non-judicial states and for over three years in judicial states; quite similarly, the length of time that mortgages have been delinquent when the foreclosure sale is finally closed is also over 2 years in non-judicial states and for over three years in judicial states..to clarify that, a foreclosure sale is the legal auction wherein the bank acquires the title after the foreclosure completes; after a foreclosure sale, the home moves into the bank's property inventory, also known as REO inventory (Real Estate Owned - metric definitions are on page 33 of the pdf).

lastly, we'll again post part of the Mortgage Monitor table showing the monthly count of active home mortgage loans and their delinquency status, which comes from page 30 of the pdf....the columns here show the total active mortgage loan count nationally for each month given, number of mortgages that were delinquent by more than 90 days but not yet in foreclosure, the monthly count of those mortgages that are in the foreclosure process (FC), the total non-current mortgages, including those that just missed one or two payments, and then the number of foreclosure starts for each month shown going back to January 2008….in the last two columns, we see the average length of time that those who have been more than 90 days delinquent have remained in their homes without foreclosure, and then the average number of days those in foreclosure have been stuck in that process because of the lengthy foreclosure pipelines…notice that although the average length of delinquency for those who have been more than 90 days delinquent without foreclosure has remained fairly steady and is now at 490 days, the average time for those who’ve been in foreclosure without a resolution has lengthened to a record average 1024 days…

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links that accompanies these commentaries, most from the aforementioned GGO posts, contact me…)

note on the graphs used here

in March a year ago the St Louis Fed, home to the FRED graphs, changed their graphs to an interactive format, which apparently necessitated eliminating some of the incompatible options which we had used in creating our static graphs before then...as a result, many of the FRED graphs we've included on this website previous to that date, all of which were all created and stored at the FRED site and which we'd always hyperlinked back there, were reformatted, which in many cases changed our bar graphs to line graphs, and some cases rendered them unreadable... however, you can still click the text links we've always used in referring to them to view versions of our graphs as interactive graphs on the FRED site, or in the case where an older graph has gone missing, click on the blank space where it had been in order to view it in the new format....